Archive for the ‘Budget 2015’ Category

New statutory renewals basis for property businesses

Posted on: August 2nd, 2016 by Sarah Curzon No Comments

Sarah CurzonIn July 2015’s Summer Budget, the Chancellor caught everyone by surprise by announcing two major changes to the taxation of buy to let properties: the abolition of wear and tear allowance and the restriction of tax relief on loan interest.

The changes to loan interest relief do not begin until April 2017, but wear and tear allowance was abolished on 6 April 2016 and replaced with a new statutory renewals basis for all residential landlords.

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National Living Wage

Posted on: January 26th, 2016 by Sarah Curzon No Comments

Sarah CurzonThe National Living Wage (announced by the Chancellor in Budget 2015) is due to be introduced from April this year to £7.20 per hour for over 25 year olds. This could potentially cost small businesses as much as £2 billion, so planning cash-flow will be key for small businesses, especially as the National Living Wage is set to rise to £9.00 per hour by 2020.

The cost to business is likely to be significant, especially for businesses who are reliant on part-time workers such as the tourism and hospitality sector and those in the care sector.

From an employee’s perspective the Government have put a very positive spin on this announcement but for business owners this could have negative repercussions. Many businesses fear that they will be forced to make redundancies to manage ever increasing salary costs. This comes at a time when the Government are also ensuring employers provide pensions for employees through Auto-Enrolment. Many employers have still not yet gone through the Auto-Enrolment process and may have no idea of the impact of the cost increases that face them.

The wage hike will affect workers aged 25 and over, and is reportedly set to boost the salaries of over six million people. The National Minimum Wage rates will stay the same for workers aged 24 and under.

For advice on how this can affect your business and help with cash flow management and forecasting please contact us on [email protected]

Autumn Statement expectations and reality

Posted on: November 24th, 2015 by Leighton Reed No Comments
Leighton Reed, Director, MHA Broomfield Alexander

Leighton Reed, Director, MHA Broomfield Alexander

The Chancellor delivered his Autumn statement and Spending Review faced with intense lobbying on proposed cuts to tax credits and departmental cuts such as the police force.

Despite the expectation of further changes to business tax, we are pleased to report that he has made very few tax changes.  So few in fact that the document “main tax announcements for the Autumn statement” runs to just three pages!

He appears to have focused on government spending rather than tax which is good for business.   Given the big tax surprises in the Summer Budget we wished for a period of stability with fewer tax changes this time around and that is what we got.

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Autumn Statement – what does the chancellor have in store?

Posted on: November 24th, 2015 by Leighton Reed No Comments
Leighton Reed, Director, MHA Broomfield Alexander

Leighton Reed, Director, MHA Broomfield Alexander

Many of our clients are SMEs and many are still getting to grips with the changes that the Chancellor announced in the Budget following the General Election earlier this year, such as the living wage. With that in mind, we’d like to see no big surprises from the Chancellor on Wednesday so that businesses can plan for the future with confidence and focus on growth, rather than regulatory change.

We are anticipating some announcements in relation to energy efficiency and cyber security, but the key issue here is whether or not any changes will have an impact on cost. SMEs make up the backbone of the UK economy and it is precisely these organisations that feel the pinch most, whether its business rates, utility prices, wages or digital security. The government needs to fully understand how its actions will affect SMEs before implementing yet more change.

Taxation of dividends & alternative extraction mechanisms for owner managed businesses

Posted on: September 15th, 2015 by Liz Mounfield No Comments
Adam Owens, Senior Tax Consultant at OneE Group

Adam Owens, Senior Tax Consultant at OneE Group

As readers will be aware, the Budget saw significant changes to the taxation of dividends. The maximum effective rate of tax will rise to 38.1% from 6 April 2016 – a major increase from the current 30.56% rate. Owner managed businesses will bear the brunt, which represents a deliberate strategy on behalf of the Chancellor.

The Budget pronouncements made clear the intention to reduce the advantage afforded by incorporations is perceived as a means to deal with some of the “asymmetries” in the tax system. The ability of owner managed businesses to pay dividends rather than salary is one of the targets.

As a result of these changes, owner managed businesses and their advisors may need to reconsider how best to extract cash. Dividends will remain more tax efficient than salary (though the advantage is reduced). Alternative options should also need to be considered.

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Summer Budget 2015 – Life Sciences sector continues to benefit

Posted on: July 27th, 2015 by Denise Roberts No Comments
Denise Roberts, Tax Director, MHA Broomfield Alexander

Denise Roberts, Tax Director, MHA Broomfield Alexander

Did the Life Sciences sector emerge as a winner in the summer Budget on 8 July?

George Osborne’s overall aim was to tackle the deficit by reducing spending and boosting growth via fuller employment creating a further 2 million jobs.

According to the Welsh Government , there are over 350 companies in the Life Sciences sector in Wales employing over 11,000 people, and welcome news for the sector came when the Chancellor announced a lowering of the corporation tax rate from 20% to 18% by 2020 – a significant reduction compared to 28% in 2010.

There was further encouragement in terms of allowances for capital expenditure, which can be significant in many Life Sciences companies. The annual investment allowance (AIA) for eligible capital expenditure is currently £500,000 but was due to fall to only £25,000 from January 2016. The Chancellor announced there will now be a permanent AIA of £200,000 per annum. This will be very helpful to many small/medium sized companies in the sector.

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Summer Budget 2015 – planning opportunities for farmers

Posted on: July 16th, 2015 by Sarah Curzon No Comments
Sarah Curzon, Tax Director, MHA Broomfield Alexander

Sarah Curzon, Tax Director, MHA Broomfield Alexander

Farmers need to do some serious planning to take advantage of new Annual Investment Allowances and tax arrangements on dividends unveiled in today’s Budget announcement.

Here’s a review of the main changes affecting the agriculture sector.

Business Tax

As expected, Annual Investment Allowance will fall from the current figure of £500,000 p.a. to a new permanent limit of £200,000 p.a., so where major capital expenditure is planned, farmers should ideally accelerate it to before 31st December and take advice on the transitional rules, since timing is important.

Farmers Averaging was not mentioned in the Budget speech but a 26 page consultation on how five year averaging might work was issued later the same day. Two potential methods were illustrated, both of which will give rise to complex calculations.

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Summer Budget 2015 – changes for doctors could prompt early retirement

Posted on: July 16th, 2015 by Sarah Curzon No Comments
Sarah Curzon, Tax Director, MHA Broomfield Alexander

Sarah Curzon, Tax Director, MHA Broomfield Alexander

Changes unveiled in the budget could prompt doctors to consider early retirement and many healthcare professionals would be affected by the change.

From April 2016, the amount that top earners can pay into pensions will be reduced. Those with income above £110,000 will have their annual allowance reduced from £40,000, gradually tapering away to £10,000.

The new arrangement will increase their personal tax liability and add further complications to an area that is already confusing, potentially making many doctors consider early retirement from the NHS scheme. With a GP shortage already in primary care this may only worsen that position. Doctors should seek early advice over this impact in order to plan accordingly.

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Summer Budget 2015 – Good news for companies

Posted on: July 16th, 2015 by Leighton Reed No Comments

Corporation tax rates, which are currently the joint lowest in the G20 at 20%, are to be reduced again. Just five years ago the main rate was 28%, however from April 2017 the rate will reduce further to 19% and then to 18% from 2020.

In addition, the annual investment allowance (“AIA”) currently allows for an immediate tax deduction for the first £500k of capital spend. This was introduced as a temporary limit and was set to reduce to £25k from the end of this year. However this will now be set at £200k for expenditure from 1 January 2016 and is said to be permanent. This will allow businesses to plan their capital expenditure on plant and machinery with more certainty as per the calls on the Chancellor pre budget.

These two measures will be welcomed by companies as they will reduce liabilities further and, with the increase in future AIA, help to simplify the system for the vast majority of  businesses. With the devolved power to set corporation rates across the UK, it will be interesting to see whether the other rates across the UK will follow suit.

Summer Budget 2015 – Inheritance Tax (IHT) changes

Posted on: July 16th, 2015 by Sarah Curzon No Comments
Sarah Curzon, Tax Director, MHA Broomfield Alexander

Sarah Curzon, Tax Director, MHA Broomfield Alexander

The current nil rate band for IHT will remain fixed at £325,000 until 5 April 2021. In addition, a main residence band will be introduced from  6 April 2017, starting at £100,000 and increasing every year by £25,000 to a maximum of £175,000 from 6 April 2020, thereafter increasing annually with CPI inflation.   If all assets pass to the spouse on the first death, the main residence band can be transferred (like the current nil rate band), and both main residence bands can be used on the second death for:

  • A property which has been or is the main residence of the deceased;
  • If left to a direct descendant  (i.e. a child (including a step-child, adopted child or foster child) of the deceased and their lineal descendants.

The main residence band is tapered where the value of the estate (after deductions for liabilities but before exemptions and reliefs) exceeds £2m, by £1 for every £2 that the estate net value exceeds that amount.

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